If a Partnership Contract Provides for Interest at 10% Annually

question 44

Multiple Choice

If a partnership contract provides for interest at 10% annually on each partner's investment,the interest

• A)Is ignored when earnings are not sufficient to pay interest
• B)Provides for the sharing of a portion of the partnership earnings in the capital ratio
• C)Is an expense of the business
• D)Must be paid in cash
• E)Legally becomes a liability of the partnership

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Definitions:

Free Trade

The policy of allowing goods and services to be traded between countries with few or no restrictions or tariffs.

General Agreement

A broad consensus or mutual understanding among parties on a specific set of terms or conditions in various contexts.

Tariffs

Taxes imposed on imported goods, typically used by governments to protect domestic industries and regulate trade balance.

Great Depression

A severe worldwide economic depression that took place mostly during the 1930s, beginning in the United States.